Annuities
Contracts that convert savings into guaranteed income you cannot outlive.
An annuity is a contract with an insurance carrier. You give them a lump sum (or a series of premiums), and in exchange they guarantee a stream of income for a set period or for the rest of your life. Annuities exist to solve one specific problem: longevity risk, the chance of outliving your savings.
The most common structures are fixed (a guaranteed interest rate, like a CD with a longer commitment), indexed (interest credited based on an index with a floor, similar in spirit to IUL), and variable (sub-accounts that resemble mutual funds). Each fits a different risk profile.
The defining feature is the payout phase. You can elect a lifetime income that pays every month for as long as you live, regardless of how the underlying account performs. That guarantee is the product. It is also why annuities can look expensive on a pure return basis: you are buying income, not return.
Annuities are not a substitute for liquid savings, and we will tell you when a fixed-income ladder or a bond portfolio fits your situation better. The right time to use an annuity is when you need a portion of your retirement income to be uncorrelated with market sequence risk.